If a particular act isn't popular with the audience, we find a little fog creates just the right atmosphere to enjoy the performance... and hide the performance.
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Muppet Show AppearancesEdit
The fog machine: the unsung hero of The Muppet Show. For example, Wayne and Wanda sing "On a Clear Day (You Can See Forever)" as the smog rolls in from the scenic factory on the landscape. Episode 120.
Or, other times, fog is useful to hide the puppeteers. The "Hugga Wugga" sketch from episode 114 featured fog to hide the puppeteers from view.